Earlier this month, Facebook sought to increase its reach by connecting with other sites across the Web. The Open Graph Protocol, announced at Facebook's f8 Developers Conference, makes it easier for outside sites to share information with Facebook when visitors want to recommend a page. But Facebook has come under increasing scrutiny for making users' data more public and available to search engines and for making changes to the terms of its privacy policy, which some users have been unaware of.

Few have been as vocal about Facebook's actions as Danah Boyd, a social media researcher at Microsoft Research New England. More generally, she has called for Web companies to take more responsibility for how they handle users' personal information. Technology Review's assistant editor, Erica Naone, recently talked with Boyd about how to think about Facebook's latest moves.

Technology Review: Why is it so hard to keep up with the way Facebook works?

Danah Boyd: People started out with a sense that this is just for you and people in your college. Since then, it's become just for you and all your friends. It slowly opened up and in the process people lost a lot of awareness of what was happening with their data. This is one of the things that frightens me. I started asking all of these nontechnological people about their Facebook privacy settings, and consistently found that their mental model of their privacy settings and what they saw in their data did not match.

TR: What's been driving these changes for Facebook?

DB: When you think about Facebook, the market has very specific incentives: Encourage people to be public, increase ad revenue. All sorts of other things will happen from there. The technology makes it very easy to make people be as visible and searchable as possible. Technology is very, very aligned with the market.

TR: Some people dismiss concerns about this sort of situation by saying that privacy is dead.

DB: Facebook is saying, "Ah, the social norms have changed. We don't have to pay attention to people's privacy concerns, that's just old fuddy-duddies." Part of that is strategic. Law follows social norms.

TR: What do you think is actually happening to the social norms?

DB: I think the social norms have not changed. I think they're being battered by the way the market forces are operating at this point. I think the market is pushing people in a direction that has huge consequences, especially for those who are marginalized.

TR: A lot of people wonder why it matters if companies share personal data. How are people affected by privacy violations?

DB: The easiest one to explain is the case of teachers. They have a role to play during the school day and there are times and places where they have lives that are not student-appropriate. Online, it becomes a different story. Facebook has now made it so that you can go and see everybody's friends regardless of how private your profile is. And the teachers are constantly struggling with the fact that, no matter how obsessively they've tried to make their profiles as private as possible, one of their friends can post a photo from when they were 16 and drinking or doing something else stupid, and all of a sudden, kids bring it into school. We want teachers to be able to have a teacher relationship to our kids that is different from what the teacher has to their intimates. Yet the technology puts the teacher constantly at risk.

Not only are social fans more likely to buy and recommend brands, but their friends are also listening.

More than two-thirds of US Facebook users said a Facebook friend referral would increase their chances of purchasing a product or visiting a retailer, according to research and consulting firm Morpace.

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Fan pages, used by 41% of respondents to show their friends what products they support, are one way to spur such positive referrals. In line with other researchers, Morpace found that coupons and discounts were also key reasons to join a fan page, cited by 37% of Facebook users. On average, users were fans of nine pages.

The racial and ethnic background of users influenced their fan page activity. White Facebook users were generally least likely to become a fan of brands and retailers.

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Hispanics had the greatest propensity to become fans in all the categories studied by Morpace. One-half of Hispanic respondents said Facebook was a good tool for researching new products, compared with 46% of Asians, 44% of African-Americans and only 31% of whites.

While data from AOL Advertising also showed that Hispanics are ahead of the general market in using the Internet to research purchases and share information socially, Orcí found marketers were not taking advantage of social opportunities to reach Hispanic users.

Startups Aim to Reinvent Local Advertising

Advertising has been a killer Internet business model, making billions of dollars for Google and others. But a number of startup companies think there's a huge untapped market in providing automatically tailored display advertising to thousands of local businesses.

Yelp, which aggregates customer reviews of local businesses, has tried to provide targeted local advertising with varied success. Now a new crop of startups are hatching plans to provide more effective advertising services to local businesses. The aim is to ease small businesses into online advertising through familiar channels such as newspaper sites, and to help these locally focused websites increase revenues by making it easier for them to service small accounts.

"There's a lot of overhead to service small advertisers," says Roger Lee, chief operating officer of PaperG, an advertising company whose customers include theBoston Globe, the Houston Chronicle, and Newsday. Most local businesses don't have the budget to pay an advertising agency to design ads for them, he explains. And it isn't cost-effective for newspapers to offer ad design services for accounts below a certain size. Lee, formerly the publisher of the Harvard Crimson, Harvard University's student newspaper, says his company wanted to find a way to use technology to fill this missing link between local businesses and local newspapers.

PaperG is testing a software system called PlaceLocal that automatically generates ads for local businesses by crawling the Web. The system scrapes the Web for basic information about a business such as its address, phone number, and opening hours. Even if the business doesn't have its own Web page, data can often be pulled from third-party services such as Yelp or Google Maps. The system then uses semantic analysis to find and extract photos and positive reviews, and it builds an ad automatically using Adobe's Flash software. The business owner or newspaper ad sales representative can customize the ad, so if PlaceLocal didn't choose the best photo or review, it's easy to select another.

Lee adds that 50 percent of small businesses don't have a website, and PlaceLocal can also be used to generate one. That way, if someone clicks on a business's ad, there is somewhere to direct them. The company is also working on algorithms that would adjust the look and feel of an ad depending on the most common types of content that turned up when crawling the Web. For example, if the system found lots of photos, it might design a more image-heavy advert. Besides making it easy to create an ad once it's sold, Lee expects PlaceLocal to help representatives sell ads in the first place. "The sales rep can have a beautiful ad designed for every lead sheet," Lee says, "which makes a real difference in the conversation."

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